Another Pa. giveaway to special interests?

Friday, May 3, 2013

We’re continually amazed, even though we shouldn’t be, at those who think trading a known quantity for an unknown quantity amounts to sound logic.

We’re talking this time — most times — about state lawmakers who think it’s a swell idea to give away a particular amount of tax revenue on the assumption that doing so will maybe create an unknown number of jobs in an industry that might generate tax revenue to perhaps offset the giveaway.

We know “X” but not “Y.” But that isn’t stopping the Legislature from pushing yet another sales tax exemption for special interest populated by the well-heeled.

Bipartisan support reportedly exists in the House and Senate to remove sales taxes on airplane parts and maintenance, to enable sales tax-free sales and repairs of privately-owned airplanes.

Proponents of the measure, like bill sponsor Rep. Bill Kortz, D-Allegheny, said plane owners in Pennsylvania are flying their jets to other states in order to avoid paying sales tax on costly maintenance, according to an article in PA Independent.

States like New York, Massachusetts, Ohio and Connecticut all have a partial or full sales and use tax exemption for aircraft. If Pennsylvania follows suit, it will boost a stagnant industry, Kortz told PA Independent.

Immediate cost to the state: $12.5 million in tax revenue. Benefit to the state? Who knows? Maybe something. Best to just do it, and then wait and see.

The Legislature’s Independent Fiscal Office reported that about 2,060 direct jobs and 2,680 more indirect jobs and more $265 million in annual industry income, would be required to offset that $12.5 million in tax revenue we already get. It did not, however, offer specifics as to how much the market would expand.

Seems a tall order, but have faith! One must have faith to make laws and manage budgets.

Look, we don’t own any airplanes. We’re betting roughly 98 percent of you reading this don’t either. So maybe we’re not suited to judge the wisdom of exempting sales tax on a captive market — the Federal Aviation Administration mandates routine maintenance, after all — in hopes that a highly specialized industry will quickly bloom as a result.

But everyone understands the concept of trading away the known for the unknown.

Worst of all, we do this kind of thing frequently. Pennsylvania has the 16th highest sales tax rate — 6 percent — in the nation. But our per capita sales tax revenues rank 27th, thanks to a tax code that’s riddled with special interest exemptions.

Now, $12.5 million isn’t a lot of money in the grand scheme of a $27 billion state budget. But given the state’s refusal to appropriately tax another, much bigger captive industry — natural gas fracking — we ought to be holding onto all the stable tax revenue we can get.

Besides, anyone who can afford an airplane but not its maintenance costs shouldn’t own one in the first place. Unless, of course, they can count on lawmakers willing to pass those costs onto others.